ASX-listed Lucapa Diamond Company has made another key advancement in the its cutting and polishing strategy, with Lulo alluvial mining company, Sociedade Mineira Do Lulo, entering into a cutting and polishing agreement with leading diamond manufacturing group Safdico International.
Safdico is a subsidiary of Graff International, one of the world’s finest high-end jewellery houses. Safdico supplies Graff with some of the most iconic and valuable polished diamonds sold in Graff stores.
Safdico, as a preferred buyer, can purchase up to 60% of Lulo’s annual alluvial rough production from Sociedade Mineira Do Lulo (Lucapa 40% and operator), as is permitted under Angola’s transformative new diamond marketing regulations.
The Lulo diamonds purchased by Safdico are placed into the cutting and polishing partnership. Once procurement and manufacturing costs are deducted, the profits generated beyond the mine gate from the sale of the resultant polished diamonds are shared equally between Sociedade Mineira Do Lulo and Safdico.
To date, Safdico has purchased approximately 4 900 carats of run of mine rough diamonds from Sociedade Mineira Do Lulo under this commercial partnership. Sociedade Mineira Do Lulo is due its first share of the partnership profits from Safdico this quarter (Q1 2020).
This new Lulo revenue stream represents another key milestone for Lucapa’s value-adding strategy.
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The new revenues streams come as SML completes a self-funded US$12 million capital investment programme designed to expand total group production to >60 000 carats in 2020 (on a 100% basis).
This production increase, coupled with the new revenue streams generated from the cutting and polishing agreement with Safdico, will enable Sociedade Mineira Do Lulo to generate higher returns for its partners and make more regular loan repayments to Lucapa.